Eben@CANSLIM ResearchMorgan Stanley sees data centre pushback as the defining wedge issue of the 2026 US midterm elections, but treats it as a state and local policy risk rather than a federal one for now. In a note published 1 September 2026, equity strategist Ariana Salvatore also flags a 24 September US-China leaders’ summit as a nearer-term flashpoint and a government funding deadline pushed into December. The bank’s base case is divided government, with negative equity seasonality into the vote.
Key Takeaways
- Morgan Stanley expects a divided government outcome from the 2026 US midterms, with prediction markets having moved steadily in the Democrats’ favour over recent months.
- Data centre pushback is Morgan Stanley’s identified wedge issue of the 2026 election, but the bank sees concrete federal policy change as more likely after the 2028 elections.
- Morgan Stanley remains constructive on AI capex, with its analysts forecasting hyperscaler capex growing to more than $1 trillion next year.
- President Xi is expected to attend a joint leaders’ summit on 24 September 2026, with Morgan Stanley warning of escalation risk if reciprocal trade measures broaden into AI.
- Federal funding risk has shifted to December, after the House passed a stopgap through 4 December and the Senate an amended version through 11 December.
Lead Analysis: What Morgan Stanley’s Fall Policy Note Says
In a report titled “Thoughts Ahead of a Full Fall: Midterm Elections, DC Pushback, US-China & AI Sovereignty, Fiscal, and Tariffs,” Morgan Stanley & Co. LLC equity strategist Ariana Salvatore sets out three policy themes for the autumn — the US midterms, US-China relations and AI sovereignty, and fiscal catalysts — plus a short read on US-Canada tariffs.
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